National Bank of Canada Net Income dropped on 23.8% in 2016 while Revenue increased slightly on 1.5%
02.12.2016 • About National Bank of Canada (
$NA) • By InTwits
National Bank of Canada reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- National Bank of Canada has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's in pair with industry average of 4.9%.
- CAPEX is quite volatile: 140 in FY2016, 130 in FY2015, 50 in FY2014, 146 in FY2013, 176 in FY2012
- The company has potentially unprofitable business model: ROIC is at 3.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
National Bank of Canada ($NA) key annual financial indicators
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 7,102 | 7,124 | 7,516 | 7,645 | 7,759 | 1.5% |
| Net Income | 1,561 | 1,449 | 1,469 | 1,549 | 1,181 | -23.8% |
Balance Sheet
|
|---|
| Cash | 3,249 | 3,596 | 8,086 | 7,567 | 8,183 | 8.1% |
| Short Term Debt | 18,124 | 18,909 | 18,167 | 17,333 | 14,207 | -18.0% |
| Long Term Debt | 2,470 | 4,868 | 3,877 | 3,393 | 1,012 | -70.2% |
Cash flow
|
|---|
| Capex | 176 | 146 | 50 | 130 | 140 | 7.7% |
Ratios
|
|---|
| Revenue growth | 12.6% | 0.3% | 5.5% | 1.7% | 1.5% | |
| Net Income Margin | 22.0% | 20.3% | 19.5% | 20.3% | 15.2% | -5.0% |
| CAPEX, % of revenue | 2.5% | 2.0% | 0.7% | 1.7% | 1.8% | 0.1% |
| ROIC | 4.0% | 3.5% | 3.6% | 3.9% | 3.1% | -0.8% |
| ROE | 24.9% | 20.2% | 17.9% | 16.7% | 11.7% | -5.0% |
National Bank of Canada ($NA) key quoterly financial indicators
| mln. CAD | FY16Q1 | FY16Q2 | FY16Q3 | FY16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 1,758 | 1,891 | 2,038 | 2,072 | -8.0% | 0.1% | 2.6% | 11.6% |
| Net Income | 239 | 193 | 460 | 289 | -39.8% | -50.3% | 5.5% | -11.9% |
Balance Sheet
|
|---|
| Cash | 6,589 | 7,452 | 8,824 | 8,183 | -2.1% | 15.2% | 34.6% | 8.1% |
| Short Term Debt | 15,573 | 14,839 | 12,748 | 14,207 | -26.1% | -15.8% | -25.2% | -18.0% |
| Long Term Debt | 3,608 | 1,015 | 1,014 | 1,012 | 11.3% | -33.6% | -33.7% | -70.2% |
Ratios
|
|---|
| Net Income Margin | 13.6% | 10.2% | 22.6% | 13.9% | -7.2% | -10.3% | 0.6% | -3.7% |
Revenue and profitability
The company's Revenue increased slightly on 1.5%. Revenue growth showed acceleration in FY16Q4 - it increased 11.6% YoY.
Net Income marign decreased on 5.0 pp from 20.3% to 15.2% in FY2016.
Capital expenditures (CAPEX) and working capital investments
National Bank of Canada's CAPEX/Revenue was 1.8% in FY2016. CAPEX/Revenue showed almost no change from FY2013 to FY2016. Average CAPEX/Revenue for the last three years was 1.4%.
Return on investment
The company operates at low ROIC (3.06%) and ROE (11.65%). ROIC decreased slightly on 0.79 pp from 3.9% to 3.1% in FY2016. ROE decreased on 5.0 pp from 16.7% to 11.7% in FY2016.
Leverage (Debt)
Debt dropped on 26.6% while cash increased on 8.1%.
Management team
Louis Vachon is a National Bank of Canada's CEO. Louis Vachon is a founder and has spent 11 years at the company. National Bank of Canada's CFO Ghislain Parent has spent 7 years at the company.
Appendix 1: Peers in Financial
Below we provide National Bank of Canada benchmarking against other companies in Financial industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Grenville Strategic Royalty Corp ($GRC) | | | | 317.2% | |
| StorageVault Canada Inc ($SVI) | | 22.2% | 7.5% | 111.8% | |
| Slate Retail REIT ($SRT.UN) | | 316.8% | 229.7% | 92.5% | 21.6% |
| Mogo Finance Technology Inc ($GO) | | 13.7% | 34.6% | 86.0% | 14.6% |
| Morguard Corp ($MRC) | | 27.2% | 9.2% | 58.8% | 4.6% |
| |
|---|
| Median (54 companies) | | 7.1% | 9.0% | 3.3% | 5.2% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Olympia Financial Group Inc ($OLY) | 80.9% | 82.6% | 83.2% | 84.5% | 83.5% |
| Morguard Corp ($MRC) | 74.0% | 69.9% | 68.6% | 76.5% | 75.5% |
| Mogo Finance Technology Inc ($GO) | 70.4% | 64.5% | 63.4% | 62.3% | |
| StorageVault Canada Inc ($SVI) | 18.2% | 22.6% | 18.3% | 52.4% | |
| Clarke Inc ($CKI) | 28.1% | 20.0% | 18.9% | 43.4% | 41.6% |
| |
|---|
| Median (9 companies) | 28.1% | 30.7% | 28.3% | 43.4% | 30.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Firm Capital Mortgage Investment Corp ($FC) | 87.6% | 87.9% | 88.8% | 86.6% | |
| Equitable Group Inc ($EQB) | 88.1% | 87.4% | 86.0% | 84.7% | 83.0% |
| Atrium Mortgage Investment Corp ($AI) | 79.8% | | | 81.9% | 83.2% |
| Trez Capital Mortgage Investment Corp ($TZZ) | | | | 76.2% | |
| First National Financial Corp ($FN) | 67.8% | 76.5% | 77.1% | 74.6% | |
| |
|---|
| Median (37 companies) | 43.7% | 33.5% | 39.8% | 32.5% | 43.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Dundee Corp ($DC.A) | 10.3% | 14.1% | 88.8% | 123.6% | |
| Gazit-Globe Ltd ($GZT) | 80.2% | 43.3% | 52.1% | 69.3% | 95.5% |
| First Capital Realty Inc ($FCR) | 127.9% | 76.1% | 73.8% | 56.7% | 79.7% |
| Killam Properties Inc ($KMP) | 80.7% | 114.1% | 143.5% | 46.7% | 59.9% |
| StorageVault Canada Inc ($SVI) | 150.5% | 73.3% | 79.1% | 21.4% | |
| |
|---|
| Median (56 companies) | 0.6% | 0.6% | 0.7% | 0.7% | 0.7% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CI Financial Corp ($CIX) | | | | | 24.1% |
| FirstService Corp ($FSV) | | | | | 17.4% |
| IGM Financial Inc ($IGM) | 14.2% | 14.2% | 13.7% | 13.7% | 13.1% |
| Alaris Royalty Corp ($AD) | 9.5% | 10.1% | 10.7% | 7.3% | 12.3% |
| Genworth MI Canada Inc ($MIC) | 11.9% | 9.6% | 9.7% | 9.5% | 9.4% |
| |
|---|
| Median (56 companies) | 4.6% | 3.8% | 3.9% | 3.0% | 3.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Element Financial Corp ($EFN) | 140.2x | 31.9x | 37.6x | 79.9x | 22.6x |
| First National Financial Corp ($FN) | 34.3x | 33.7x | 40.9x | 37.4x | |
| StorageVault Canada Inc ($SVI) | 11.2x | 9.7x | 13.6x | 35.7x | |
| Gazit-Globe Ltd ($GZT) | 12.8x | 12.7x | 15.3x | 22.1x | 15.2x |
| Equitable Group Inc ($EQB) | 11.8x | 10.2x | 9.8x | 12.3x | 13.7x |
| |
|---|
| Median (28 companies) | 5.3x | 4.6x | 4.7x | 6.0x | 7.8x |
|---|
